As markets continue to climb - the Dow Jones Industrial Average is now in positive territory and just under 60 points away from the 20,000 level - Joshua Mahony, market analyst at IG, said:

The FTSE 100 has again had an outstanding day, with the index gaining from the first minute to the last as it reached new all-time highs once more. The fact that we are seeing the index hit these new highs in such a fearless manner says a lot about the potential for further gains. Interestingly we have seen both [President elect] Trump and [UK prime minister} May providing positive news for the respective US and UK indices, yet for very different reasons. While Trump has boosted US stocks by setting out a positive outlook for the future, the strength of the FTSE has been largely down to the pound devaluation associated with fears over a hard Brexit outcome.

Back with the markets, and the FTSE 100 is well on course to break two records - a new closing peak and the longest run of closing highs. With a winning streak of nine consecutive end-of-day peaks, this would beat the previous record set in May 1997.

Connor Campbell, financial analyst at Spreadex, said:

With the pound still at 2 month to 10 week lows (even if it did manage to shrink much of today’s losses), the miners boosted by data from China [factory gate inflation] and the supermarkets led higher by Morrisons impressive Christmas performance the FTSE has plenty of support this Tuesday..[This] sees the index set to break the record for most consecutive days of new all-time closing highs, a record that has lasted for just shy of 20 years.

Back in the markets, the pound has pulled out of today’s slide and is now flat against the US dollar at $1.217.

It’s still down slightly against the euro though, at €1.149.

Kathleen Brooks of City Index says the recovery could be temporary...

Monday was a bit like Deja-Vu for currency traders, and a keen reminder of how politics can play havoc with a currency. Sterling declined to its lowest level since October as political fears and the Brexit premium started to bite.

The pound has managed to claw back some losses on Tuesday, but it remains at risk from a further decline in sentiment.

This year’s Davos will certainly be different, thanks to the Brexit vote and Donald Trump’s election victory.

Attendees will be pondering whether populist forces will triumph in elections in Germany, France and the Netherlands this year, and president Trump’s views on climate change, financial regulation and global inequality.

So it’s no surprise that Klaus Schwab, who created WEF decades ago, is no fan of populism.

But, of course, those ‘populist’ forces are no fans of Davos either!

CNBC’s Matt Clinch has a good take:

In a nod to this current mood, this year’s World Economic Forum (WEF) is titled “Responsive and Responsible Leadership” and its official agenda describes a “weakening of multiple systems” that has eroded confidence and speaks of a possible “downward spiral” fuelled by protectionism, populism and nativism.

Donald Trump’s inauguration as U.S. president on January 20 will overshadow the event but it’s hard to see how every conference, bilateral meeting or roundtable in Davos won’t include some reference to this political upheaval, which the conservative news aggregation site The Drudge Report calls the “new, new world order”.

Indeed, some critics have attacked the event itself as being a reason why U.S. citizens started to question globalization and contemplate the negative impacts it’s had on some parts of Western nations.

Bloomberg’s Matthew Campbell and Albertina Torsoli agree that China will be one of the big issues at WEF next week.

They explain:

The most high-profile guest by far will be Chinese president Xi Jinping, the first sitting Chinese leader to attend the event. He’s heading a larger-than-ever delegation of business executives from the world’s second-biggest economy, underscoring China’s determination to assume a global leadership role as other major powers are hobbled by domestic infighting.

China’s two richest citizens, Alibaba Group Holding Ltd. founder Jack Ma and Dalian Wanda Group Co. Ltd CEO Wang Jianlin, will join him and appear in solo on-stage interviews. China’s deepening engagement with the world will, meanwhile, be the subject of a discussion on “China’s Role for Global Prosperity,” in which stock-market regulator Fang Xinghai and state-assets chief Xiao Yaqing will appear alongside Lloyds of London Chief Executive Officer Inga Beale.

Schwab says this year’s meeting must make progress towards tackling the world’s problems - and argued that the rising tide of populism isn’t the answer.

Every simplified approach to deal with the global complex agenda is condemned to fail.

We cannot just have populist solutions.

The problems we face technologically, economically, socially and politically are so tremendous, such that sustainable solutions requite a systemic, holistic approach....and particularly the collaboration of all global stakeholders, united in one mission - improving the state of the world.

Schwab also singled out the challenge created by the Fourth Industrial Revolution (the new wave of automation and robotics), and pointed out that Chinese premier President Xi Jinping will address Davos for the first time.

Over in Italy, two people have been arrested for allegedly hacking into the email accounts of European Central Bank President Mario Draghi, former prime ministers Matteo Renzi and Mario Monti, and thousands of others.

We don’t know what information was obtained, or what it was used for, but it will only intensify the focus on cybersecurity.

Reuters has the details:

“There were tens of thousands of email accounts hacked, and among them were accounts belonging to bankers, businessmen and even several cardinals in the Vatican,” Roberto Di Legami, director of the specialised cyber police unit that conducted the investigation, told Reuters.

Police have sequestered a server in Rome containing thousands of files, but 99 percent of the data was stored in the United States, Di Legami said. The information will be shipped back in coming days but it will take some time before it can be analysed.

Paresh Davdra, CEO and Co-Founder of RationalFX, says the uncertainty around Brexit is overshadowing the fact that UK economic data has been better than expected.

He writes:

“The pound’s lowly performance this week took a sharper hit, reaching fresh 10-week-lows, owing largely to dimming hopes for a ‘soft’ Brexit. The key issue being the taut stance of EU over free-movement and its effect on the prospects of a single market access deal for the U.K. Selling pressure on the pound is expected to stay until further details are revealed in the coming weeks.

On the bright side, the economy is still defying expectations as it continues to persist on the momentum from 2016 and a lower pound has positively affected exports. Modest economic growth figures ideally mean that the BoE cannot afford to increase interest rates anytime in the near future – such indicators normally strengthen the pound, however, the Brexit clamour seems to be the sole driver of the current narrative.”